Fino Payments Bank Ltd has received the Reserve Bank of India’s in-principle approval to convert into a Small Finance Bank (SFB), marking a significant milestone for India’s digital banking ecosystem.
The approval reflects the progress made in Fino’s 18-year journey focused on last-mile banking, financial inclusion and a merchant-led distribution model across Bharat. The transition falls under the RBI’s on-tap licensing framework for SFBs, which permits only payments banks with a minimum of five years of operations and resident ownership to apply.
The move carries strategic implications for the bank. An SFB licence will enable Fino to enter the lending business, leveraging its extensive merchant and customer base. Its ecosystem of two million merchants offers a ready distribution channel for credit, collections and repayments.
The bank’s recent performance underscores the strength of its operations, with average deposits rising 36 per cent year-on-year to Rs 2,306 crore, and 56,000 merchants added during the September quarter.
Industry observers note that transitions of this nature further India’s financial inclusion efforts and reinforce differentiated banking models that cater to underserved segments. The development also highlights the growing maturity of India’s digital-first banking entities, which are expanding from payment-centric offerings to full-stack, regulated financial services.
Fino Payments Bank’s progression towards Small Finance Bank status marks an important step for the institution, the SFB sector and the broader evolution of the country’s FinTech and banking landscape.
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